First, there is no need to wait to file the 2023 tax return as long as you use the correct numbers to file. Simply correct the cost basis of the property and TurboTax will do the calculations correctly.
Second, the instructions about amending a prior year are show below. Lastly, let's make sure you use the correct cost basis before you begin.
Let's discuss the cost basis of your residential rental property (assuming this is the type of property).
- If the property was purchased with the intent to rent it and it was never used for personal purposes then you should use the original cost, purchase expenses and any capital improvements before you began to rent; OR
- If the property was used for personal purposes before it was converted to a rental property then you must use the lower of the following:
- The actual cost as calculated in number 1 above, OR
- The fair market value (FMV) on the date of conversion (usually real estate doesn't go down in value unless there are specific reasons in your area)
Use the steps below to enter you property in the asset section. Be sure to enter the total cost including land, then enter the land amount when prompted.
- In TurboTax, search for rentals and select the Jump to link at the top of the search results.
- Answer Yes to the question Did you have any rental or royalty income and expenses in 2021 for property you own?
- Follow the on-screen instructions as you proceed through the rental and royalties section.
- We'll ask you to enter general information about your rental (like description, address, and ownership percentage).
- Eventually, you'll come to the Rental Summary screen, which is where you enter your rental income and expenses,
- Scroll to select Assets.
- When you enter your rental house as an asset be sure to select Residential Rental Property
- Continue to follow the prompts to complete your asset entry.
Note: If you made capital improvements after the property began to be rented, you can add those as a separate asset and use the date they were completed as the date placed in service.
The amended 2022 tax return. Follow the instructions to amend your 2022 tax return and enter the correct cost basis for your rental property. You should be using the same numbers you entered for 2023. Be sure to read the instructions carefully so that TurboTax knows the corrected numbers and the original numbers.
Please add any questions you may have as you go through your returns.
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